Correlation Between Goldsun Building and Chumpower Machinery

Can any of the company-specific risk be diversified away by investing in both Goldsun Building and Chumpower Machinery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Goldsun Building and Chumpower Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldsun Building Materials and Chumpower Machinery Corp, you can compare the effects of market volatilities on Goldsun Building and Chumpower Machinery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Goldsun Building with a short position of Chumpower Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldsun Building and Chumpower Machinery.

Diversification Opportunities for Goldsun Building and Chumpower Machinery

-0.83

Correlation Coefficient

Goldsun Building  Chumpower Machinery

Pay attention - limited upside

The 3 months correlation between Goldsun and Chumpower is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldsun Building Materials and Chumpower Machinery Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chumpower Machinery Corp and Goldsun Building is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Goldsun Building Materials are associated (or correlated) with Chumpower Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chumpower Machinery Corp has no effect on the direction of Goldsun Building i.e., Goldsun Building and Chumpower Machinery go up and down completely randomly.

Pair Corralation between Goldsun Building and Chumpower Machinery

Assuming the 90 days trading horizon Goldsun Building Materials is expected to under-perform the Chumpower Machinery. In addition to that, Goldsun Building is 1.57 times more volatile than Chumpower Machinery Corp. It trades about -0.06 of its total potential returns per unit of risk. Chumpower Machinery Corp is currently generating about 0.12 per unit of volatility. If you would invest  2,180  in Chumpower Machinery Corp on December 25, 2024 and sell it today you would earn a total of  210.00  from holding Chumpower Machinery Corp or generate 9.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Goldsun Building Materials  vs.  Chumpower Machinery Corp

Goldsun Building Mat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldsun Building Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Chumpower Machinery Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chumpower Machinery Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chumpower Machinery may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Goldsun Building and Chumpower Machinery

The main advantage of trading using opposite Goldsun Building and Chumpower Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldsun Building position performs unexpectedly, Chumpower Machinery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Chumpower Machinery will offset losses from the drop in Chumpower Machinery's long position.

The idea behind Goldsun Building Materials and Chumpower Machinery Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.